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The Supreme Court of Canada removed a large Bay Street firm from acting as counsel for improperly seizing and reviewing privileged electronic documents. During the execution of an Anton Piller order, electronic documents deemed privileged were downloaded onto a portable hard drive and then placed onto CD-ROMs. These were then provided to a third-party accounting firm in a sealed envelope and later opened and copied by Canadian and U.S. counsel on record for one of the parties. The issue before the Supreme Court was to determine the appropriate test for removal of counsel and, more importantly, which party bore the onus to illustrate or rebut the prejudice arising from disclosing the privileged documents.

McCarthy Tétrault Notes:

This case is important generally as it sets out guidelines for preparation and execution of an Anton Piller order. These guidelines should be welcomed as providing clarity in this potentially dangerous area. The case also considered how to approach the removal of counsel where privilege had been breached in the course of execution. The Court held that the lawyers who undertake a search under authority of an Anton Piller order bear the onus of showing no real risk that such confidences will be used to the detriment of the defendant. The party being searched should not bear the onus. In addition, the court went on to indicate that given the complex nature of commercial litigation, certain factors must be taken into account before disqualifying counsel for violation of privilege. These factors include: how the documents came into the plaintiff’s possession; what the plaintiff did after knowing the documents were privileged; the extent of review of the documents; the contents of the solicitor-client privilege and the degree to which it was prejudiced; the stage of the litigation; and the potential effectiveness of a firewall or other precautionary steps to avoid mischief.

In the particular case before the Court, the lawyers admitted that they had examined privileged material but they had not taken care to record what exactly had been seized and subsequently examined.

The Court was left unable to determine whether the privileged material actually examined was prejudicial or not. Concluding that the lawyers had only themselves to blame for this difficulty, the Court naturally had to assume the worst.